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Cell Tower Valuations Maine Association of Assessing Officers


									                                 Maine Association
                              of Assessing Officers
                                  Sebasco Estates
                               September 29, 2011

Why are Wireless
Communications Towers &
Sites so Difficult to Value
Gary J. McCabe, CAE

      Wireless Valuation Q&A (1)
◘ What are we valuing?
◘ Wireless communications
  infrastructure & equipment?
◘ What is wireless communications
  ◘ Land or land rights
  ◘ Site Improvements
  ◘ Antenna structures (towers,
    roof-tops, in-building,
     utility poles, other)
  ◘ Base station shelters,
     MSO facilities
      Wireless Valuation Q&A (2)

◘ What is wireless
  communications equipment?
◘ Antennas
◘ Cables (coax) & connectors
◘ Base station equipment;
◘ Modems, routers, switches,
  batteries, multiplexers,
  rectifiers, circuit packs

         Real Estate vs. Personalty;
             The 3 Prong Test

1.   Annexation
2.   Adaptation
3.   Intent
◘    New York
◘    Pennsylvania
◘    Massachusetts

     New York; Supreme Court of Rockland Co.
          Nextel v. Spring Valley, 2/2004
To meet the common-law definition of a
   fixture, personalty must:
1. Be annexed to real property or
   appurtenant thereto;
2. Be used as part of the realty;
3. Intended by the parties to be a
   permanent accession to the freehold.
 Antennas held to be real fixtures even if
   removed at end of lease.
 Ruling is inconsistent with
   Commissioner of Revenue treatment of
   towers as personalty for sales tax
   Pennsylvania; Court of Common Pleas,
  Shenandoah Mobile v. Cumberland Co. 9/2004
   Cell tower is taxable real property:
1. Tower possessed requisite degree of
   attachment by bolts into concrete pad
   & would require a crane to be
2. Tower is essential to the permanent
   use of the improvement, concrete pad.
3. The intent of parties was for the tower
   to become part of the realty.
 Court found no inconsistency with PA
   DOR treatment of towers as
   personalty for use tax purposes.

     Massachusetts; Commissioner of Revenue
        Sales Tax Letter Ruling 3/2000 (00-7)
COR ruled towers & shelters are considered
   realty and not subject to sales & use tax.
The facts considered for property tax:
1.    “Land and the buildings erected thereon or affixed
      thereto are property taxed as a unit and this rule is not
      affected by private agreements or by the degree of
      physical attachment to the land”. Assessors of Wilmington
      v. Avco Corp. (1970) SJC
2.    Tenant possessed the right to remove buildings at the
      end of lease did not prevent the assessment of
      buildings as real estate.
      Milligan v. Drury 130 Mass. 428 (1881) SJC

  Massachusetts Appellate Tax Board

• The cell tower’s attachment to its realty is
  comparable to the attachment of the silos
  to their surroundings in New England
  Milling Co., Inc. v. Assessors of Ayer,
  Mass. ATB Findings of Fact and Reports

      Assessment Jurisdiction: Maine
o Wireless infrastructure:
  cell towers; real estate
  (locally valued & taxed).
o Wireless equipment:
  personal property
  (centrally taxed)
o Wire-line networks:
  personal property
  (centrally taxed).

U.S. Property Tax Classification; Cell Towers

                                                                               VT   ME
                       MT        ND
   OR                                      MN
             ID                                                                           MA
                                 SD                  WI                        NY
                       WY                                  MI                               RI
                                           IA                             PA
        NV                        NE                                                 NJ
                  UT                                 IL   IN                        DE
                            CO                                       WV VA          MD
                                  KS        MO
              AZ                      OK                                 SC
                       NM                       AR
                                                     MS AL          GA
 Personal                         TX

 Real Estate                                                             FL

 Towers Non-Taxable Personalty

 Mix of Real Estate & Personal Property                                               10
Where is Al Gore?

                  On-line Discovery Tools
• FCC web-site
• Tower Company web-sites
                                 Take I-95 North into Maine.
Tower Data                       Take exit 24 and turn right onto
                                 Rt-196 South. Go 2.5 miles and
Tower         75059              take Route 1 North. Go 6.5
Number:                          miles and take exit towards
Structure     140 ft.            Congress Ave/Western Ave and
Height (AGL):                    take a right. Go about a mile
Type:         Guyed              and turn left onto a small dirt
FAA #:        94-ANE-443-OE      road (renos bluff)across from
FCC #:        1022133            stone cutting business. Drive
                                 slowly on dirt road and look for
                                 tower on the left fairly well
                                 hidden by the trees.          12
Wireless Infrastructure Segment

          Traditional Tower Types

 Monopole         Self Support
 Typically         Typically        Typically
100’-200’ ft.     200’-400’ ft.   400’-1200’ ft.
     M&S Self-Support Towers
                      Section 67
HT $/LF        HT $/LF
 50 290        225 804
 75 390        250 863
100 465        300 975
150 612        350 1082
200 742        400 1184

Included in the costs are
concrete footings, tower
erection, painting, platforms,
designers’ fees, lighting (if
req.), guyed wired (if req.)       15
       M&S Monopole Towers
                       Section 67
        HT     $/LF
         50      357
         75      466
        100      554
        150      716
        200      858

Included in the costs are
concrete footings, tower
erection, painting, platforms,
designers’ fees, lighting (if
req.), guyed wired (if req.)        16
M&S Triangular Guyed towers
                          Section 67

      Type           HT     $/LF
 24” Radio          < 400      68
 30” Cellular       < 400    213
 40” Microwave      < 400    263
 54” Master TV      < 400    523

Included in the costs are concrete
footings, tower erection, painting,
platforms, designers’ fees, lighting
(if req.), guyed wired (if req.)

Non-traditional Towers

Web exclusive, March 11, 2011
Cell tower nears completion

The newly erected cell phone tower on
North Deer Isle Road will soon be in
operation, according to Blaine Hopkins
of Global Tower Assets, LLC, the
company that built and owns the tower.
Hopkins said the work on the 190-foot
tower, located on land leased from
Milton and Priscilla Haskell, was
delayed by stormy weather in January.
The site’s electric power was
connected on March 3.

Web exclusive, March 11, 2011
Cell tower nears completion (cont.)

The tower’s primary tenant is AT&T.
Information on when AT&T will begin
service from the site was not available
from company officials at press time.
However, Hopkins said that AT&T
would begin using the tower as soon
as possible after testing is completed,
which would likely be within 30 days.

Cell tower nears completion– page 2
Hopkins said that a second cell phone
company—name not disclosed—is
likely to sign a lease for the next lower
space on the tower by April. The tower
was designed to hold antennas for up
to six cell phone companies.

The Haskell site was the third of three
sites where tower permits were issued
in the spring of 2010. (See June 24
issue of Island Ad-Vantages.) Hopkins
said that with his company’s tower in
place, which was an investment of
$400,000, it is unlikely that towers on
the other permitted sites will be built.    21
Cell Site

            Sears Island

        Typical Cell Site Land Lease
LESSOR hereby leases to LESSEE a portion of that certain
parcel of property, located at Plainfield Road, and being
described as a 100’ x 100’ parcel containing 10,000 sq.ft.,
together with the non-exclusive right -of-way for ingress
and egress, seven (7) days a week twenty-four (24) hours
a day, over or along a thirty-foot (30’) wide right-of-way
extending from the nearest public way, Plainfield Rd., to the
leased space, and for the installation and maintenance of
utility wires, poles, cables, conduits, and pipes over, under,
or along the right-of-way.
Terms: 5-years, with 4, 5-year renewal options, with annual
percentage increases.
Taxes: Paid by Lessee
End of Term Condition: Removal of tower.                     23
Land (site) Valuation
Based on Ground Rent

      Term    PV Factor   Annual    Indicated
      Years    at 8.0%     Rent       Value
       10       6.71      $12,000     $80,520
       15       8.56      $12,000   $102,720
       20       9.82      $12,000    $117,840
       25       10.67     $12,000   $128,040

 Land Lease Chart
Steel in the Air, Inc.

       Overall (Tower & Site) Income Approach
• Gross Income from Tower Space
  Rental to Tower Owner
– LESS site & business expenses
= Net Operating Income
/ Overall Cap.Rate (based on industry)
= Total Cell Site Property Value
   •   Leased land
   •   Site utilities & access road
   •   Tower & Site Improvements
   •   Buildings provided by Tower Co.

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